We live in a high-tech world that increasingly blurs the lines between one’s professional and personal lives.

Despite the uncertainty of what’s fair game and what’s off limits in our digital culture, legal commentators say employers must stay up-to-date on the constantly moving parts pertaining to workplace privacy.

On April 19th, the Supreme Court will hear oral arguments in a case on whether workers have a “reasonable expectation of privacy” when sending personal text messages on company-owned mobile devices.

The case, City of Ontario v. Quon, involves several SWAT team members who sent sexually explicit text messages on government-issued pagers. The California lawsuit arrives on the Supreme Court’s door courtesy of the 9th U.S. Circuit Court of Appeals.

The Supreme Court will determine, in part, whether the California officers had a reasonable expectation of privacy when using the pagers, and if the police department had an official no-privacy policy that was undermined by a lieutenant who told the officers that they could use the pagers for personal matters.

The court’s upcoming decision, whether it’s in favor of the police department or the SWAT team members, will probably raise new questions about privacy rights in the workplace, especially for public employers.

Case notes

In June 2008, the appeals court ruled that the Ontario police department violated SWAT team members’ Fourth Amendment rights when a police chief read the personal content of their text messages without their consent.

The team’s supervisor wanted to see if SWAT team member John Quon and three other members’ excessive use of their pagers resulted from personal or work-related activities. The chief asked the pager service provider to hand over transcripts of archived messages sent to and from the SWAT team members. In reviewing the transcripts, he noticed that some personal text messages were sexual in nature.

According the 9th Circuit ruling, the police department had a written statement asserting, in part, that it would monitor text messages. Therefore, the city’s attorneys argued the SWAT team members had no reasonable expectation of privacy. The SWAT team members maintain, however, that their supervisor assured their messages would not be reviewed as long as they paid any over-the-limit fees for texting.

Ultimately, the appeals court held that “the search of the [officers’] text message violated their Fourth Amendment and California constitutional privacy rights because they had a reasonable expectation of privacy in the context of text messages.

Yet, [w]e do not endorse a monolithic view of text message users’ reasonable expectation of privacy, as this is necessarily a context-sensitive inquiry,” the court added. Under the Stored Communications Act, electronic communication providers cannot reveal the contents of text messages without authorization from the end user, even if the employer is paying for the services.

The City of Ontario and USA Mobility Wireless, which acquired the pager-service company that released the text messages to the police department, appealed the 9th Circuit decision to the Supreme Court.

Privacy implications for public employers

“The Quon case is worth paying attention to because the idea that an employer can issue a policy explaining to workers that it reserves the right to review e-mails and text messages can be potentially undermined by a supervisor stating the contrary,” explains Christine Lyon, a partner in the Palo Alto, Calif., office of Morrison and Foerster, where her practice concentrates on privacy and employment law.

In addition, Quon and his fellow officers claimed that the police department also violated their privacy rights under the California constitution.

In the state, residents can sue an employer for invasion of privacy. Consequently, the appeals court not only analyzed the case by examining the Fourth Amendment, but also privacy rights claims under the state constitution. As such, the Quon ruling widens the window for California residents to prevail in privacy invasion lawsuits against private-sector employers.

However, the legal issues before the Supreme Court will mainly focus on the fact that the SWAT team members are public employees employed by a government entity responsible for public safety. Police authorities believed that their mission to protect the public’s safety outweighs the SWAT team members’ privacy interests.

“It’s possible that the Supreme Court may side with the police department because of this argument,” explains Lyon. Some employers will argue that they have a compelling reason, such as a safety concern or a court order requesting documents, to monitor and review workers’ e-mails and text messages created on company-owned computers and mobile devices.

On the other hand, “if the Supreme Court rules in favor of the SWAT team members, then the take-home message to employers would be to make sure your managers and supervisors fully understand and communicate to workers that the company reserves the right to monitor e-mails and text messages,” Lyon explains.

New Jersey-based attorney Joseph Paranac Jr. explains that the Quon case is a state action, which “means it is covered under Fourth Amendment protections against unreasonable searches and seizures. Public employees have a greater expectation of privacy than their private-sector counterparts.”

Still, the lawsuit points to the “rising prominence of cyber-liability in our Twittering, Facebooking, iPhone-enabled age,” adds Paranac, who is a member in the labor and employment practice group at LeClairRyan.

Paranac considers the Quon case the perfect example as to why employers should create straightforward policies on how their workers use company-owned computers, pagers and other electronic devices.

“For example, the case of Stengart v. Loving Care Agency, which is headed for the New Jersey Supreme Court, centered on whether e-mails sent by an employee to her lawyer using a company-owned computer are protected by the attorney-client privilege and therefore off-limits from monitoring,” Paranac explains. “In that case, the plaintiff used her password-protected Yahoo account, not the company’s e-mail system, to communicate with her attorney about a planned lawsuit against the company.”

Paranac believes that the nation’s high court “might well carve out similar exceptions for other sensitive communications, such as doctor-patient e-mails sent with employer-owned equipment. This puts employers in a quandary,” he explains.

The best that employers can do is to create and “enforce clear and consistent polices, because we are just at the beginning of a process in which the courts will likely shape the limits of those policies,” Paranac adds. “Until that process is complete, employers and employees alike will have to operate within a kind of cyber-liability grey area. The wheels of justice turn slowly, and both courts and lawmakers are struggling to catch up to technology.”

The MySpace case

Another case that has raised eyebrows is Pietrylo v. Hillstone Restaurant Group. In September 2009, a federal district court in New Jersey upheld a jury verdict, concluding that the employer, the Hillstone Restaurant Group, violated the Stored Communications Act and the state’s electronic surveillance statue.

A manager at the restaurant who was not authorized to use a MySpace page created by two employees reviewed the contents of the site, which was set up, in part, as an outlet for the two workers to express grievances about the employer.

During the trial, one employee testified that she felt pressure to hand over her password to the manager. After reviewing the content on the MySpace page, the manager fired the two workers who created the MySpace page, citing that the content on the site hampered employee morale and went against the company’s core values.

“It’s a noteworthy case, because it’s one of few published opinions on social media and the workplace,” Lyon says.

The Pietrylo case definitely highlights the importance of distinguishing between information that an employee puts out on the Internet, for example a blog, for the whole world to see versus content from a limited-access Web site.

Advice for employers

Employment experts say an employer can reduce the expectation of privacy among its workforce by having a good written policy that explains the company reverses the right to monitor e-mails, text messages and Internet usage on computers, smartphones and BlackBerries that it owns or pays for.

Still, Paranac and other experts recommend employers create a separate policy on social media that details how workers are representatives of the company and that they should not leak confidential information or discuss internal matters on social media sites.

Furthermore, the policy should explain to workers that activities conducted on social networking sites should be limited to nonworking hours, unless the use is for legitimate business purposes.

Additionally, employees’ comments should not be discriminatory or harassing in nature. This includes making disparaging or inflammatory remarks about the employer and its business.

In essence, “you are not to bad mouth the company on social media sites because it can have an immediate negative effect on the company,” adds Paranac. “Every employer is benefited by promulgating a policy that makes clear to employees what is kosher and what is not,” he adds.

The first private pension plan was developed by the American Express Company in 1875?

Massachusetts passed the first minimum wage law in 1912?

The first major medical group insurance contract was issued to General Electric’s management personnel in 1949?

The microhistory linked to below highlights the major events and legislation that Hewitt Associates believes influenced the growth and quality of employee benefit plans and compensation practices in the United States from 1636 to 2009. Historical sources are sometimes contradictory and unclear and, therefore, this timeline may be imperfect. However, this list provides a valuable tool to examine developments and trends in employee benefits and compensation over the past 350-plus years.

It’s that time of year again: tax season. While most Americans may prefer to file their returns and put their finances on the backburner until next year, Hewitt Associates, a global human resources consulting and outsourcing firm, believes now is an ideal time for employees to review their 401(k) plan and make sure they’re on track for retirement. In many cases, workers might find they can take a few relatively simple steps to substantially increase their nest egg and reduce their IRS payments for next year’s tax season.

“For many workers, thinking about saving for retirement can be overwhelming,” said Pamela Hess, Hewitt’s director of retirement research. “What they don’t realize is that there are a number of simple actions they can take—and a few they can avoid—that can significantly impact their nest egg and help them meet their long-term retirement goals.”

Hewitt offers Americans a few simple savings do’s and don’ts that can make a significant impact on their 401(k) plan balances:

Do’s

Do participate in your 401(k): Contributing to a traditional 401(k) plan actually lowers your taxable income for the year by allowing you to contribute pre-taxed money directly from your paycheck. This money grows tax-free until you retire or you start withdrawing funds. And chances are quite good your employer offers one! Hewitt research shows that the overwhelming majority of mid- to large-sized companies—96 percent —offer a 401(k) plan to their employees, and nearly three in ten (29 percent) offer a Roth 401(k).
Do increase your contribution rate: Did you know that contributing just 1 percent or 2 percent more of your salary to your 401(k) can have a dramatic impact on your retirement savings? For example, a 30-year-old employee earning an average salary of $50,000 who increases his/her contribution rate from 4 percent to 6 percent will have accumulated an extra $295,000 by the time he/she reaches retirement age. That same worker can save an extra $881,000 at retirement by regularly increasing his/her contribution rate in this manner throughout his/her career1. Many employers (59 percent) offer contribution escalation—where you can increase your contribution rates automatically and gradually over time without having to take any additional action.

Do put your plan on autopilot: Whether it’s because the process is too confusing, too time consuming, or both, the majority of Americans take a back seat when it comes to managing their 401(k) plans. Most employers today offer tools and features that take the guesswork out of saving and investing. Check to see if your employer offers target-date funds or automatic rebalancing tools, which can ensure you have a balanced mix of funds in your plan.

Taking advantage of these tools and features can potentially increase your retirement savings by 50 percent or more over the course of your career2.

Do take advantage of advice: According to a joint study from Hewitt Associates and Financial Engines, a leading independent investment advisor providing retirement help, the median annual return for employees using investment help was almost 2 percent higher than those who did not. Not sure where to start? Many employers offer services and tools that can help you make informed investment choices based on your particular needs. Hewitt research shows that about half (51 percent) currently offer online investment guidance, and 39 percent offer online, third-party investment advisory services. In addition, 28 percent of employers currently offer managed accounts, which lets you delegate the overall management of your account to an outside professional.

Don’ts

Don’t give up free money: Did you know that more than a quarter (28.2 percent) of workers cut their retirement savings short by contributing below the company match threshold? Make sure you’re contributing enough to your 401(k) to receive your full employer match. A 30-year-old employee earning $50,000 in 2010 can save 50 percent more at retirement if he or she contributes enough to his/her retirement plan each year to get the full company match3. And there’s good news even if your employer cut your match during the past two years. Hewitt research shows that 80 percent of employers that reduced or suspended their match in 2009 plan to restore it in 2010.

Don’t cash out: If you’re changing jobs or leaving your current job, don’t cash out your 401(k) savings. According to Hewitt research, 46 percent of employees do cash out, sacrificing potentially hundreds of thousands of dollars in retirement savings. For example, if you cash out $5,000 now, you will pay full taxes on that balance, plus a 10 percent early withdrawal fee. Keeping that $5,000 invested in a 401(k) plan can potentially turn into more than $50,000 at retirement.

Don’t overinvest in company stock: It’s a common temptation for employees to invest a significant portion of their 401(k) money in their employer’s stock. However, this can be a risky move. Even well-respected companies slump or stagnate for a period, while some even go out of business. It’s important to revisit your 401(k) plan portfolio and make sure you are investing no more than 10 percent of your assets in any single fund, including your employer’s stock.

It may be the biggest financial question in your life. With 80 million baby boomers now heading into the flight path for retirement, it’s a pressing one, too.

Yet a horrifying number of people have never even asked it — and may not know how to find answers.

Earlier this month, a survey from the Employee Benefit Research Institute, a leading nonprofit in the retirement field, found that fewer than half of workers, 46%, had tried to calculate how much they would need for a comfortable retirement.

That is even scarier than the data showing that most people haven’t saved enough. (And the two, of course, are closely related. One of the biggest reasons people haven’t saved enough for retirement is that they don’t realize how much they will need.)

So how do you go about working out the answer? There’s a simple five-step approach.

1. Find the Target

Start by estimating your “target retirement income.” That’s simply the annual income you think you will need to live comfortably in retirement. Some experts advise drawing up budgets.

But if you are looking for a ballpark figure, there is a simpler approach. You can just assume that the discretionary income you are likely to need in retirement is about the same as the one you have now. It’s not perfect, but it’s a good place to start.

So take your current gross income, and deduct the costs you no longer expect to have once you are retired. That includes your payroll taxes. It includes the amount you’re saving. It may include temporary expenses, such as college costs for your children. And if you are currently paying a mortgage, and expect to have it paid off by the time you retire, it includes the mortgage costs, too.

What is left after these costs is your discretionary income. If you want to know what you will need in retirement in order to live comfortably, that’s as good a guess as any.

2. Estimate Social Security

Work out how much you are likely to get each year in retirement from Social Security.

Don’t forget any income you are likely to get from other sources, such as a traditional company pension.

These used to be the bedrock of retirement planning, but fewer and fewer workers are covered by them now. Companies have shifted toward 401(k) plans, where the investment risk is borne by the employees rather than the employer.

Even those who are still covered by traditional pension plans typically rely on them less. These plans reserve their biggest benefits for those who stay with the same company for their entire career, and who does that anymore?

If you are still covered by a traditional pension plan, you should contact the administrators to find out how much you are likely to get when you retire.

4. Subtract Income From Your Target

With these three pieces of information in hand, you can now work out how much retirement income you will have to provide from your own savings. The answer, simply enough, is your target retirement income (step one) minus the income you can expect from Social Security (step two) and any traditional pension (step three).

5. Multiply the Result by 20

And from this you can estimate the savings you will need to accumulate in order to generate that income each year. It’s about 20 times as much as the annual income.

In other words, if you are going to need to generate about $10,000 a year in retirement income out of your own resources, you will probably need to save about $200,000 by the time you retire. If you want to generate about $50,000 a year, you will probably need to save $1 million, or 20 times that.

Why 20 times? It’s simple math. You don’t want to run out of money, so to be safe you should really save enough to last for several decades. Many of those turning 65 in decent health these days should plan on lasting into their 90s. And when you are retired, you should probably plan on the basis that your investments may only earn 3% a year above inflation, maybe even less.

Investors may earn more, but those in retirement are probably going to want to play it reasonably safe. Based on those assumptions — they are, I admit, conservative — you will need to save about 20 times the annual income you need your savings to generate. Those who want to be even more secure could save 25 times.

For many people, this savings target will work out at around eight times current gross income. That’s because the target retirement income is often about 80% of current income, Social Security aims to replace maybe 40%, and 20 times the difference is eight times. (If you’ve paid off a mortgage, you will need less).

Some people will tell you this figure is too high. They’ll tell you a 65-year-old today can buy a lifetime annuity of $10,000 a year for about $130,000, or 13 times as much. But this is a dangerous illusion. It ignores inflation.

Over a decade or two, even mild inflation will seriously erode the real value of a fixed income. If inflation were to jump — a significant possibility — the risk is even bigger. The numbers here are based on real, post-inflation calculations.